Inside Nykredit’s new wave bail-in bond

Author: Lizzie Meager | Published: 12 Jul 2016
Copenhagen-based Nykredit is unlikely to be the last to issue this type of debt
Danish mortgage credit bank Nykredit has successfully closed a unique style of bail-in bond, the first globally to specifically address the possible need for conversion in case of resolution. The notes, which are unlikely to be the last of their kind, are fully compliant with the EU’s Bank Resolution and Recovery Directive (BRRD).

The €500 million ($557 million) senior resolution notes, or tier 3 – a global first – will take the hit before other senior debt if the bank faces difficulty. 

Although as a mortgage credit bank Nykredit doesn’t actually have to comply with BRRD, it is subject to Danish mortgage bank-specific rules that impose an additional two percent capital buffer. It is the first bank to use contractually bail-inable senior debt to meet this requirement.

Nykredit, Europe’s largest mortgage bank and covered bond issuer,...